Vistara’s CEO on Airfare Pricing and Merger with Air India: A Balanced Equation
In a recent press conference, the CEO of Vistara, a joint venture between Tata Group and Singapore Airlines, addressed concerns regarding air ticket pricing fluctuations. Vistara is currently in the process of merging with Air India, a move that has been in the works since Tata Group’s announcement of the acquisition in November 2022. The CEO emphasized that this merger is a strategic move for growth, not a cost-cutting exercise, and assured that no job losses are anticipated as a result.
Vistara’s Growth and Future Plans
The CEO underscored Vistara’s remarkable nine-year growth trajectory and revealed plans for network expansion in the coming three to six months. The airline is currently awaiting legal clearances to further integrate with Air India. Non-competitive integration activities have already begun, and discussions pertaining to closer cooperation are slated to proceed once all approvals are in place.
Airfare Pricing: A Balanced Equation
Addressing the oft-debated issue of fluctuating airfares, the CEO pointed out that while complaints about high fares are common, instances of price drops are seldom acknowledged. Despite occasional seasonal price spikes, Vistara’s airfares for the year 2023 were notably lower than the previous year. The CEO assured that mechanisms are in place to prevent irrational pricing, particularly during times of natural calamities, to guard against price gouging.
Stability Amidst Rising Operational Costs
He highlighted that, despite escalating operational costs, the average airfare between key routes such as Delhi and Mumbai has remained relatively stable over the past two decades. This constancy is attributed to increased capacity, the advent and growth of low-cost airlines, among other market factors. According to the CEO, airfare pricing is a function of supply and demand, and he expressed hope for a balance where travel remains affordable for customers, and airlines can sustain profitable operations.
The Indian Airfare and Global Comparisons
When asked about the comparison of Indian airfare levels with global standards, the CEO opined that it would align with India’s growth trajectory, especially as secondary and tertiary cities continue to develop. As part of the merger deal, Singapore Airlines is set to acquire a 25.1% stake in Air India, thereby enhancing the new joint entity with Vistara’s rich experience.